For Business

Trading Psychology

What Is Revenge Trading

Revenge trading is a trade placed to get a loss back, and its size is set by the loss rather than by the rule, so that each trade doubles the one before and a morning can pass the day's limit in twenty-five minutes. This paper shows you one example morning in arithmetic, 100, then 200, then 400 lost; the idea as a coin dropped down a well and a purse emptied after it; the two staircases of size, the rule's flat and the loss's doubling; the stopwatch that shows twelve minutes between the loss and the next order; and the Time and Volume columns on your platform, which show the shape before the total has finished adding up.

Difficulty
Beginner
Reading time
5 min
Pages
8
Reviewed by
Saman Rahbar

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One example morning

Revenge trading is a trade placed to get a loss back, and its size is set by the loss rather than by the rule. Take one example morning on a 10,000-dollar account. At 10:40 the plan's trade, 0.40 lot with a 25-pip stop, loses 100 dollars. At 10:52 a trade twice the size goes in to win it back, and loses 200. At 11:05 a trade twice that goes in to win that back, and loses 400. Seven hundred dollars in twenty-five minutes, on a day whose limit was 300, passed in the second revenge trade. The first loss was the plan's. The next two were the loss's, and doubling is what a loss asks for.

A coin down a well

Picture a well with a coin dropped down it, and a purse being emptied after the coin. A coin down a well is a coin gone; throwing the purse after it makes the well no shallower, and the well was never holding the coin for anyone. Revenge trading is the purse. The first loss is the coin, and it is gone the moment the stop fills. The trade placed to get it back is not aimed at the market's next move; it is aimed at the coin, and the market does not know there was a coin. It only sees the purse, and takes that too, at whatever size it was thrown.

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